New York property owners may have the ability to alter the terms of their existing home loans. If you are struggling to stay current on your mortgage, it may be a good idea to inquire about a modification. However, if you’re simply looking for a way to take advantage of changing market conditions, it may be best to refinance.
What to know about a loan modification
A loan modification changes the terms of your current mortgage without paying it off and replacing it with a new one. Modifications may include a temporary reduction in the amount of interest paid to the lender or an extension of the loan’s term. Typically, pursuing these changes may result in negative consequences for your credit score.
What to know about refinancing your mortgage
When you refinance your mortgage, you are replacing your existing loan with a new one. As with a modification, you may be able to obtain a lower interest rate, longer term or other benefits that make it easier to manage your housing payment. It isn’t uncommon for homeowners to refinance their loans in an effort to get rid of private mortgage insurance (PMI) payments. A real estate law attorney may be able to talk about other potential benefits to replacing your current home loan with a new one.
An attorney may be able to walk you through the process of obtaining new home loan terms. He or she may also be able to review your current mortgage to determine if refinancing might trigger an early payment penalty. If so, legal counsel might work with your lender to create a solution that allows you to reduce your housing payment without incurring significant fees.